Business Accounting
Question Bank
Course Introduction
Business Accounting introduces the fundamental principles and practices of accounting as applied to business organizations. The course covers key concepts such as the accounting cycle, preparation and analysis of financial statements, and the use of accounting information in decision-making. Students will learn how to record business transactions, understand assets, liabilities, and equity, and gain practical skills in bookkeeping, adjusting entries, and basic financial reporting. Emphasis is placed on interpreting accounting data to support business planning and management.
Recommended Textbook
Accounting 9th Global Edition by Charles T. Horngren
Available Study Resources on Quizplus
24 Chapters
3900 Verified Questions
3900 Flashcards
Source URL: https://quizplus.com/study-set/3448
2
Chapter 1: Accounting and the Business Environment
Available Study Resources on Quizplus for this Chatper
156 Verified Questions
156 Flashcards
Source URL: https://quizplus.com/quiz/68487
Sample Questions
Q1) Which of the following financial statements reports an increase or decrease in net cash during the time period covered?
A)Income statement
B)Statement of owner's equity
C)Statement of cash flows
D)Balance sheet
Answer: C
Q2) Different users of financial statements (investors, creditors, tax authorities, etc.)all focus on the same parts of the financial statements for the information they need.
A)True
B)False
Answer: False
Q3) Joe purchased office equipment for $1,250 cash. What is the effect on accounts?
A)One asset account increases; one liability account increases.
B)Two asset accounts increase.
C)One asset account increases; another asset account decreases.
D)One asset account increases; one equity account increases.
Answer: C
To view all questions and flashcards with answers, click on the resource link above. Page 3
Chapter 2: Recording Business Transactions
Available Study Resources on Quizplus for this Chatper
156 Verified Questions
156 Flashcards
Source URL: https://quizplus.com/quiz/68486
Sample Questions
Q1) The trial balance shows total amounts for assets, liabilities, and equity.
A)True
B)False
Answer: False
Q2) For Capital, the category of account and its normal balance are:
A)Owner's equity and a credit balance.
B)Assets and a debit balance.
C)Liabilities and a credit balance.
D)Owner's equity and a debit balance.
Answer: A
Q3) The first step of journalizing an entry is to:
A)post the accounts to the ledger.
B)identify each account affected and its type.
C)determine whether each account is increased or decreased.
D)record the transaction in the journal, including a brief explanation.
Answer: B
Q4) The drawing (withdrawals)account is increased by a debit.
A)True
B)False
Answer: True
Page 4
To view all questions and flashcards with answers, click on the resource link above.
Chapter 3: The Adjusting Process
Available Study Resources on Quizplus for this Chatper
160 Verified Questions
160 Flashcards
Source URL: https://quizplus.com/quiz/68485
Sample Questions
Q1) Under accrual basis accounting, an expense is recorded ONLY when the cash is paid out.
A)True
B)False
Answer: False
Q2) The adjusting entry to record Depreciation expense accomplishes which of the following?
A)Records an expense
B)Updates a contra asset
C)Updates a liability
D)Both A and B
Answer: D
Q3) Which of the following is a contra account?
A)Depreciation expense
B)Accumulated depreciation
C)Unearned revenue
D)Earned revenue
Answer: B
To view all questions and flashcards with answers, click on the resource link above. Page 5
Chapter 4: Completing the Accounting Cycle
Available Study Resources on Quizplus for this Chatper
165 Verified Questions
165 Flashcards
Source URL: https://quizplus.com/quiz/68484
Sample Questions
Q1) Only temporary accounts appear on the post-closing trial balance.
A)True
B)False
Q2) Revenue accounts and expense accounts are closed to the Income summary account.
A)True
B)False
Q3) Which of the following accounts will be closed by debiting the Income summary account?
A)Depreciation expense
B)Accounts payable
C)Service revenue
D)Accumulated depreciation
Q4) Which of the following accounts are temporary accounts that must be closed at the end of the year?
A)Assets, liabilities and withdrawals
B)Revenues, expenses and withdrawals
C)Assets, liabilities and capital
D)Revenues, expenses and capital
To view all questions and flashcards with answers, click on the resource link above. Page 6
Chapter 5: Merchandising Operations
Available Study Resources on Quizplus for this Chatper
168 Verified Questions
168 Flashcards
Source URL: https://quizplus.com/quiz/68483
Sample Questions
Q1) Inventory turnover is 8.0. Calculate days in inventory.
A)14.5
B)2.5
C)57.0
D)45.6
Q2) Michelin Jewelers completed the following transactions. Michelin Jewelers uses the perpetual inventory system. On April 2, Michelin sold $9,000 of merchandise to a customer on account with terms of 3/15, n/30. Michelin's cost of the merchandise sold was $5,500. On April 4, the customer reported damaged goods and Michelin granted a $1,000 sales allowance. On April 10, Michelin received payment from the customer. If this were the only transaction for the period, what amount would be shown on the income statement for Gross profit?
A)$2,260
B)$3,500
C)$3,260
D)$3,230
Q3) The periodic inventory system keeps a running record of inventory and cost of goods sold.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 7
Chapter 6: Merchandising Inventory
Available Study Resources on Quizplus for this Chatper
155 Verified Questions
155 Flashcards
Source URL: https://quizplus.com/quiz/68482
Sample Questions
Q1) Martin Sales had a Beginning inventory balance of $120 made up of 10 units purchased for $12.00 per unit. Early in the month, they purchased 16 units at $10.00 per unit. Later that month, they sold 15 units. Martin uses a perpetual inventory system, and applies FIFO. How much is the Ending inventory balance?
A)$116
B)$130
C)$132
D)$110
Q2) A company should NOT change the inventory costing method each period in order to maximize net income. This is an example of the disclosure principle.
A)True
B)False
Q3) A company is uncertain whether a complex transaction should be recorded as gain or loss. Under the conservatism principle, they should choose to treat it a loss. A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 8
Chapter 7: Internal Control and Cash
Available Study Resources on Quizplus for this Chatper
161 Verified Questions
161 Flashcards
Source URL: https://quizplus.com/quiz/68481
Sample Questions
Q1) Which of the following describes the internal control component information system?
A)Internal auditors monitor company controls to safeguard assets, and external auditors monitor the controls to ensure that the accounting records are accurate.
B)Control procedures are designed to ensure that the business's goals are achieved.
C)Only authorized users have access to various parts of the information system. D)The information system is the "tone at the top" of the business.
Q2) Under the Sarbanes-Oxley Act, the outside auditor must issue an internal control report.
A)True
B)False
Q3) As long as the same person deposits customer checks and records the deposits into the ledger, there will be good internal control over cash receipts.
A)True B)False
To view all questions and flashcards with answers, click on the resource link above. Page 9
Chapter 8: Receivables
Available Study Resources on Quizplus for this Chatper
166 Verified Questions
166 Flashcards
Source URL: https://quizplus.com/quiz/68480
Sample Questions
Q1) A business is holding a note receivable and wishes to cash it in before its maturity date by selling it to a bank. If the business receives less than the maturity value of the note, the difference is treated as:
A)Interest revenue.
B)Sales revenue.
C)Gain on sale of property, plant & equipment.
D)Interest expense.
Q2) GAAP prefers companies to use the:
A)direct write-off method to evaluate bad debts.
B)allowance method to evaluate bad debts.
C)amortization method to evaluate bad debts.
D)360-day method to evaluate bad debts.
Q3) On September 1, 2013, Adirondac Marine Supplies made a loan to one of its customers. The customer signed a 6-month note for $1,500 at 10%. How much interest revenue did Adirondac record in the year 2013?
A)$150
B)$125
C)$100
D)$50
To view all questions and flashcards with answers, click on the resource link above.
Page 10
Chapter 9: Plant Assets and Intangibles
Available Study Resources on Quizplus for this Chatper
170 Verified Questions
170 Flashcards
Source URL: https://quizplus.com/quiz/68479
Sample Questions
Q1) An asset impairment will be reflected by an increase in the book value of an asset, as shown on the balance sheet.
A)True
B)False
Q2) An asset costs $80,000 and has a salvage value of $7,000. It has a four-year life. Using double-declining-balance depreciation, Year 1 depreciation would be:
A)$20,000.
B)$40,000.
C)$18,250.
D)$36,500.
Q3) Treating a capital expenditure as an expense causes an understatement of net income.
A)True B)False
Q4) The cost of fencing around a building is included in the cost of the building. A)True B)False
To view all questions and flashcards with answers, click on the resource link above. Page 11
Chapter 10: Current Liabilities and Payroll
Available Study Resources on Quizplus for this Chatper
159 Verified Questions
159 Flashcards
Source URL: https://quizplus.com/quiz/68488
Sample Questions
Q1) Notes payable are considered short-term if they are due within the current operating cycle.
A)True
B)False
Q2) Ensuring efficiency of the payroll process is one of the two key controls for payroll.
A)True
B)False
Q3) Carter Company records sales on account of $950,500. The company operates in a state that imposes a 5% sales tax. Which of the following would be the amount of the Sales tax payable to the state?
A)$47,525
B)$50,500
C)$45,000
D)$55,000
Q4) Estimated warranty payable would be included in the liability section of the balance sheet.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 12
Chapter 11: Long-Term Liabilities, Bonds Payable, and
Classification of Liabilities on the Balance Sheet
Available Study Resources on Quizplus for this Chatper
161 Verified Questions
161 Flashcards
Source URL: https://quizplus.com/quiz/68478
Sample Questions
Q1) On December 31, 2013, Peterson Sales has a Bonds payable balance of $40,000 and a Discount on bonds payable of $2,100. On the balance sheet, how will this information be shown?
A)$40,000 less discount of $2,100 for a net balance of $37,900
B)$40,000 plus discount for a total balance of $42,100
C)$40,000 only
D)$40,000 less one-tenth of $2,100 for a net balance of $39,790
Q2) The current portion of mortgages payable would normally be shown on the balance sheet in current liabilities.
A)True
B)False
Q3) FICA tax payable would normally be shown on the balance sheet in long-term liabilities.
A)True
B)False
Q4) Installment payments for mortgages typically contain both an amount for principal repayment and an amount for interest.
A)True
B)False
Page 13
To view all questions and flashcards with answers, click on the resource link above.
Chapter 12: Corporations: Paid-In Capital and the Balance Sheet
Available Study Resources on Quizplus for this Chatper
167 Verified Questions
167 Flashcards
Source URL: https://quizplus.com/quiz/68477
Sample Questions
Q1) When a company sells stock for more than the par value, it will record a gain on sale for the amount in excess of par.
A)True
B)False
Q2) Which of the following measures a company's success in using assets to earn income?
A)The rate of return on stockholders' equity
B)Days sales in receivables
C)Inventory turnover
D)The rate of return on total assets
Q3) Hot Tamale Company had $120,000 of revenues and $125,000 of expenses. No dividends were paid. The third of the year-end closing entries should include which of the following line items?
A)Credit Retained earnings $5,000.
B)Debit Retained earnings $5,000.
C)Debit Income summary $5,000.
D)Credit Income summary $125,000.
Q4) Deferred tax can either be an asset or a liability.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 14
Chapter 13: Corporations: Effects on Retained Earnings and the
Income Statement
Available Study Resources on Quizplus for this Chatper
164 Verified Questions
164 Flashcards
Source URL: https://quizplus.com/quiz/68476
Sample Questions
Q1) Qdot International originally issued 50,000 shares of common stock at a price of $20 per share. A year later, they distributed a 10% stock dividend to shareholders. At the time of the stock dividend, the share price had gone up to $24 per share. Which of the following statements is TRUE?
A)Qdot will record sales revenues of $120,000.
B)Qdot will record a loss of $20,000.
C)Qdot will record a gain of $20,000.
D)Qdot will record neither a gain nor a loss.
Q2) RT Corp. shows a loss from flooding of $235,000 for the year. Flooding is not uncommon in the area, and so this loss will be included in operating income.
A)True
B)False
Q3) Lenders may restrict the amount of treasury stock a corporation may purchase in order to ensure a minimum level of stockholders' equity.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Page 15
Chapter 14: The Statement of Cash Flows
Available Study Resources on Quizplus for this Chatper
162 Verified Questions
162 Flashcards
Source URL: https://quizplus.com/quiz/68475
Sample Questions
Q1) Sonesta Company owed one of its creditors $250,000, but did not have enough cash to repay the debt. Following lengthy negotiations, the parties agreed that Sonesta would issue 100,000 shares of common stock to settle the debt. How would this transaction be shown on the statement of cash flows?
A)In the investing activities section
B)In the financing activities section
C)In the operating activities section
D)In the noncash investing and financing activities section
Q2) Which would NOT be included in the operating activities section of a direct method statement of cash flow?
A)Changes in accounts payable
B)Changes in accounts receivable
C)Changes in inventory
D)Changes in long-term notes payable
Q3) Of the following, which is NOT a cash inflow from a financing activity?
A)Sell treasury stock
B)Issue common stock
C)Earn interest revenue
D)Borrow money on a long-term note
To view all questions and flashcards with answers, click on the resource link above.
Page 16
Chapter 15: Financial Statement Analysis
Available Study Resources on Quizplus for this Chatper
163 Verified Questions
163 Flashcards
Source URL: https://quizplus.com/quiz/68474
Sample Questions
Q1) The gross profit percentage is an indicator of how well a company is positioned to pay off its short-term liabilities.
A)True
B)False
Q2) Rate of return on net sales is a measure of a company's profitability.
A)True
B)False
Q3) Which of the following balance sheet displays shows only percentages?
A)Horizontal analysis balance sheet
B)A common-size balance sheet
C)A vertical analysis balance sheet
D)A balance sheet as shown in the annual report of a company
Q4) If an analyst wishes to see a company's current assets as a percentage of total assets, a vertical analysis would be the best approach.
A)True
B)False
Q5) The debt ratio is the ratio of total debt divided by total equity.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 17
Chapter 16: Introduction to Management Accounting
Available Study Resources on Quizplus for this Chatper
163 Verified Questions
163 Flashcards
Source URL: https://quizplus.com/quiz/68473
Sample Questions
Q1) The accountant for Spiral Supplies deliberately post-dated a check to pay for business expenses in order to record a higher net income for the company. As long as the amount was not material, this would not be considered unethical behavior.
A)True
B)False
Q2) Selling and administrative expenses are subtracted from cost of goods sold to obtain gross profit.
A)True
B)False
Q3) Management is accountable to its suppliers and vendors in which of the following ways?
A)Providing products to customers that are safe and free of defects
B)Repaying loans in a timely manner
C)Providing a return on the owner's shareholders' investment
D)Making timely payments and complying with contract terms
Q4) Factory rent, taxes and insurance are product costs.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 18
Chapter 17: Job Order and Process Costing
Available Study Resources on Quizplus for this Chatper
172 Verified Questions
172 Flashcards
Source URL: https://quizplus.com/quiz/68472
Sample Questions
Q1) Darrius Travel Services provided the following information:
Cost allocation rate for direct labor: $40 per hour
Cost allocation rate for indirect costs: $22 per hour
If Darrius receives $700 for a job requiring 12 hours of direct labor, they will make a profit of $44.
A)True
B)False
Q2) Falstaff Products estimated manufacturing overhead costs for the year at $500,000. Falstaff also estimated 8,000 machine hours for the year. Falstaff bases their predetermined manufacturing overhead rate on machine hours. On January 31, job 300 was completed. It required 12 machine hours to produce. How much manufacturing overhead was allocated to the job?
A)$62.50
B)$19.20
C)$750.00
D)$42.00
Q3) In a process costing system, each department has its own Work in process account.
A)True B)False
To view all questions and flashcards with answers, click on the resource link above. Page 19
Chapter 18: Activity-Based Costing and Other Cost Management Tools
Available Study Resources on Quizplus for this Chatper
162 Verified Questions
162 Flashcards
Source URL: https://quizplus.com/quiz/68471
Sample Questions
Q1) Johnson Production Company uses just-in-time production and accounting methods. On June 1, Johnson paid direct labor costs of $5,000 in cash. Which of the following journal entries correctly records this transaction?
A)Debit $5,000 to Cash, credit $5,000 to Conversion costs.
B)Debit $5,000 to Conversion costs, credit $5,000 to Cash.
C)Debit $5,000 to Manufacturing overhead, credit $5,000 to Cash.
D)Debit $5,000 to Raw and in-process inventory, credit $5,000 to Cash.
Q2) Torreya Company produces gaskets for the automotive industry. Current production cost is $4.50 per carton of 100. There is a highly competitive market for the product, and Torreya currently uses a target pricing approach. Currently, equivalent products are selling for $5.90 per carton. Torreya wishes to earn a minimum of a 30% markup over cost. What would be their most appropriate response?
A)To raise the price to $5.95 per carton
B)To change over to cost plus pricing
C)To mark the price down to $5.80 per carton
D)To stop producing this product because they cannot earn the required amount of profit
To view all questions and flashcards with answers, click on the resource link above.
Page 20
Chapter 19: Cost-Volume-Profit Analysis
Available Study Resources on Quizplus for this Chatper
165 Verified Questions
165 Flashcards
Source URL: https://quizplus.com/quiz/68470
Sample Questions
Q1) The variable cost per unit is assumed to be constant within a particular relevant range of activity.
A)True
B)False
Q2) Which of the following statements is CORRECT if the variable cost per unit increases while the sale price per unit and total fixed costs remain constant?
A)The breakeven point decreases.
B)The contribution margin increases.
C)The breakeven point remains the same.
D)The breakeven point increases.
Q3) Total fixed costs can change from one relevant range to another.
A)True
B)False
Q4) When a company produces more units than it sells, absorption costing income will exceed variable costing income.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
21
Chapter 20: Short-Term Business Decisions
Available Study Resources on Quizplus for this Chatper
163 Verified Questions
163 Flashcards
Source URL: https://quizplus.com/quiz/68469
Sample Questions
Q1) Foster Corporation produces two products-P and Q. P sells for $4.00 per unit; Q sells for $5.25 per unit. Variable costs for P and Q are respectively, $2.50 and $3.09. There are 3,570 direct labor hours per month available for producing the two products. Product P requires 3 direct labor hours per unit and Product Q requires 4.5 direct labor hours per unit. The company can sell as many of either product as it can produce. What is the maximum monthly contribution margin that Foster can generate under the circumstances? (Please round to nearest whole dollar.)
A)$1,785
B)$1,714
C)$1,650
D)$2,567
Q2) When considering whether to have a new roof installed on a building, the money spent previously on roof repairs to the old roof is information that is relevant to the business decision.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
22
Chapter 21: Capital Investment Decisions and the Time
Value of Money
Available Study Resources on Quizplus for this Chatper
153 Verified Questions
153 Flashcards
Source URL: https://quizplus.com/quiz/68468
Sample Questions
Q1) The rate of return and payback methods DO NOT take into consideration the time value of money. Discounted cash flow methods DO make use of the time value of money.
A)True
B)False
Q2) When a company invests in lean manufacturing processes or "green" technologies, the efficiencies and elimination of waste are factors that should NOT be included when conducting a discounted cash flow analysis of the investment.
A)True
B)False
Q3) The payback method and the rate of return method are both conceptually better than the discounted cash flow models because they are based on cash flows.
A)True
B)False
Q4) Which of the following best describes the term opportunity cost?
A)The cost incurred to qualify for an investment opportunity
B)The benefit that is given up when choosing one out of a series of options
C)The benefits of an investment which has come available suddenly
D)The opportunity to invest in certain cash flows and returns
To view all questions and flashcards with answers, click on the resource link above. Page 23
Chapter 22: The Master Budget and Responsibility Accounting
Available Study Resources on Quizplus for this Chatper
157 Verified Questions
157 Flashcards
Source URL: https://quizplus.com/quiz/68467
Sample Questions
Q1) The cash budget can be prepared before the sales budget.
A)True
B)False
Q2) Which of the following BEST describes a business unit where the manager is primarily responsible for generating sales revenue?
A)Profit center
B)Investment center
C)Revenue center
D)Cost center
Q3) One of the key functions of responsibility accounting is to evaluate the performance of company managers and the units they manage.
A)True
B)False
Q4) The budgeted "Cash payments for purchases" must be completed before the "Inventory, Purchases and Cost of goods sold budget" can be prepared.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 24
Chapter 23: Flexible Budgets and Standard Costs
Available Study Resources on Quizplus for this Chatper
166 Verified Questions
166 Flashcards
Source URL: https://quizplus.com/quiz/68466
Sample Questions
Q1) Price Variance = (Actual Price x Actual Quantity)- (Standard Price x Standard Quantity).
A)True
B)False
Q2) Standard costs help motivate employees by serving as benchmarks against which their performance is measured.
A)True B)False
Q3) Which of the following will result in an unfavorable direct materials efficiency variance?
A)The actual cost per unit of direct materials exceeded the standard cost of direct materials.
B)The actual cost per unit of direct materials was less than the standard cost of direct materials.
C)The actual quantity of direct materials used per unit exceeded the standard quantity of direct materials allowed per unit.
D)The actual quantity of direct materials used per unit was less than the standard quantity of direct materials allowed per unit.
To view all questions and flashcards with answers, click on the resource link above. Page 25
Chapter 24: Performance Evaluation and the Balanced Scorecard
Available Study Resources on Quizplus for this Chatper
166 Verified Questions
166 Flashcards
Source URL: https://quizplus.com/quiz/68465
Sample Questions
Q1) When a small company grows to a large size, it may decide to decentralize because it is difficult for one owner (or manager)to manage an entire, large business.
A)True
B)False
Q2) Manufacturing cycle time is a measure pertaining to the balanced scorecard's:
A)learning and growth perspective.
B)internal business perspective.
C)financial perspective.
D)customer perspective.
Q3) Many companies use a balanced scorecard for performance evaluation. The balanced scorecard has four business perspectives, and utilizes KPIs to evaluate performance in various areas. Which of the following KPIs would relate to the learning and growth perspective?
A)Hours of employee training
B)Number of warranty claims
C)Percentage of market share
D)Return on investment
To view all questions and flashcards with answers, click on the resource link above.
Page 26